NAIROBI: The Government plans to carry out an analysis of the tea industry value chain with a view to identifying challenges hindering desired growth and offer farmers adequate income.
Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed said the mission would help deepen Government's understanding of tea as a crop from the farm to consumption level.
"The Government working with the industry stakeholders will carry out a deep tea value chain inquiry to detect the bottlenecks that have been frustrating its growth," he said.
Kenya, he said, is reputed for its high quality tea, but stakeholders have been complaining of numerous challenges, for example high transport cost, labour cost, taxes, and escalating cost of production largely as a result of high energy costs. Tea industry actors, for instance, have been calling on the Government to waive ad valorem levy of one per cent introduced in 2012 to fund research and marketing for the country's top income earner.
East African Tea Trade Association, the body that manages the Mombasa auction wants the one per cent ad valorem levy reduced to 0.25 per cent, which is proportionate to the recommendations of the 2007 tea industry task force.
The study planned by the Government will draw experiences from the past studies compiled by the industry institutions and individual actors.
"For us it is meant to acquaint ourselves with the tea industry which currently is the leading foreign exchange earner," Mr Mohamed said during the Kenya Tea Development Agency (KTDA) directors' conference at Kenyatta International Convention Centre (KICC).
The announcement by the Government comes about two months after 600,000 tea farmers affiliated to KTDA received reduced final pay (bonus). The growers' earnings reduced by Sh15.8 billion owing to a sharp drop in international prices,bringing the pay to a six-year low.
The farmers were paid a total bonus of Sh19.8 billion, a 44.3 per cent drop on the Sh35.6 billion paid last year.The total earnings for KTDA decreased from Sh69.2 billion last year to Sh52.9 billion in the year under review, representing a 23 per cent decline.
The favourable weather conditions experienced in 2013 through to 2014 led to an oversupply of tea triggering reduction in prices," said KTDA Chief Executive Lerionka Tiampati when releasing the final payment in September this year.
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